<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 10-Q
___________________________
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
---
Exchange Act of 1934
For the Quarterly Period Ended March 31, 1999
Transition Report pursuant to Section 13 or 15(d) of the Securities
---
Exchange Act of 1934
Commission File Number: 1-10991
VALASSIS COMMUNICATIONS, INC.
(Exact Name of Registrant
as Specified in its Charter)
Delaware 38-2760940
(State or Other Jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)
19975 Victor Parkway
Livonia, Michigan 48152
(address of principal executive offices)
Registrant's Telephone Number: (734) 591-3000
_______________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and, (2) has been subject to such filing
requirements for the past 90 days:
Yes X No
-------- -------
As of May 5, 1999, there were 57,059,600 shares of the Registrant's Common Stock
outstanding, after giving effect to the 3 for 2 stock split issued on May 12,
1999 to shareholders of record on April 16, 1999.
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
VALASSIS COMMUNICATIONS, INC.
Condensed Consolidated Balance Sheets
(dollars in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
Assets 1999 1998
--------------- --------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $9,570 $6,939
Accounts receivable (less allowance for doubtful
accounts of $1,980 at March 31, 1999 and $1,354 at
December 31, 1998) 103,189 95,430
Inventories:
Raw materials 10,849 11,817
Work in progress 12,417 20,051
Prepaid expenses and other 6,150 5,817
Deferred income taxes 1,790 1,790
Refundable income taxes --- 1,215
------------- -------------
Total current assets 143,965 143,059
-------------- -------------
Property, plant and equipment, at cost:
Land and buildings 21,756 21,456
Machinery and equipment 115,124 114,912
Office furniture and equipment 20,906 20,143
Automobiles 956 1,025
Leasehold improvements 1,048 1,022
-------------- --------------
159,790 158,558
Less accumulated depreciation and amortization (113,618) (112,200)
-------------- --------------
Net property, plant and equipment 46,172 46,358
-------------- --------------
Intangible assets:
Goodwill 68,594 68,594
Other intangibles 85,387 85,387
-------------- ---------------
153,981 153,981
Less accumulated amortization (114,106) (112,806)
--------------- ---------------
Net intangible assets 39,875 41,175
---------------- ---------------
Other assets (primarily debt issuance costs) 2,598 1,422
---------------- ---------------
Total assets $232,610 $232,014
================ ================
</TABLE>
2
<PAGE>
VALASSIS COMMUNICATIONS, INC.
Condensed Consolidated Balance Sheets, Continued
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
Liabilities and Stockholders' Deficit 1999 1998
---------------- ------------------
(unaudited) (note)
<S> <C> <C>
Current liabilities:
Accounts payable $69,938 $69,064
Accrued interest 5,876 4,542
Accrued expenses 20,680 26,345
Income paxes payable 19,225 ---
Progress billings 49,466 58,615
---------------- ------------------
Total current liabilities 165,185 158,566
---------------- ------------------
Long-term debt 319,429 340,461
Deferred income taxes 1,511 1,511
Commitments and contingencies
Stockholders' deficit:
Common stock of $.01 par value. Authorized 100,000,000 627 629
shares; issued 62,732,604 at March 31, 1999 and 62,854,360
at December 31, 1998; outstanding 57,048,266 at
March 31, 1999 and 57,589,322 at December 31, 1998
Additional paid-in capital 71,962 69,416
Accumulated deficit (132,046) (165,937)
Foreign currency translations (283) (298)
Treasury stock, at cost (5,684,338 shares at March 31, 1999 and
5,265,038 shares at December 31, 1998) (193,775) (172,334)
---------------- ------------------
Total stockholders' deficit (253,515) (268,524)
---------------- ------------------
Total liabilities and stockholders' deficit $232,610 $232,014
================ ==================
</TABLE>
NOTE: The balance sheet at December 31, 1998 has been derived from the audited
consolidated financial statements at that date but does not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
VALASSIS COMMUNICATIONS, INC.
Condensed Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 31, March 31,
1999 1998
---------------- -----------------
<S> <C> <C>
Revenues:
Net sales $221,906 $204,951
Other 299 732
---------------- -----------------
Total revenues 222,205 205,683
---------------- -----------------
Costs and expenses:
Cost of products sold 138,421 133,902
Selling, general and administrative 20,203 18,453
Amortization of intangible assets 1,299 2,024
Interest 7,391 9,007
---------------- -----------------
Total costs and expenses 167,314 163,386
---------------- -----------------
Earnings before income taxes 54,891 42,297
Income taxes 21,000 16,250
---------------- -----------------
Net earnings $33,891 $26,047
================ =================
Net earnings per common share, basic $ .59 $ .43
================ =================
Net earnings per common share, diluted $ .58 $ .43
================ =================
Shares used in computing net earnings per share, basic 57,118,800 60,170,219
================ =================
Shares used in computing net earnings per share, diluted 58,244,948 60,834,840
================ =================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
VALASSIS COMMUNICATIONS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
-----------------------------------------
MARCH 31, MARCH 31,
1999 1998
----------------- ------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $33,891 $26,047
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization 3,304 3,939
Provision for losses on accounts receivable 225 225
Minority interest --- (3)
(Gain)/loss on sale of property, plant and equipment (65) 6
Stock-based compensation charge 823 1,551
Changes in assets and liabilities which increase (decrease) cash flow:
Accounts receivable (7,984) (18,573)
Inventories 8,602 2,337
Prepaid expenses and other 1,013 (3,494)
Other assets (176) 105
Accounts payable 874 17,375
Accrued expenses and interest (4,331) (7,896)
Income taxes 20,440 14,915
Progress billings (9,149) (14,961)
----------------- ------------------
Total adjustments 13,576 (4,474)
----------------- ------------------
Net cash provided by operating activities 47,467 21,573
----------------- ------------------
Cash flows from investing activities:
Additions to property, plant and equipment (1,864) (5,770)
Investment in Merge L.L.C. (1,000) ---
Proceeds from sale of property, plant and equipment 110 ---
Other 16 (121)
----------------- ------------------
Net cash used in investing activities (2,738) (5,891)
----------------- ------------------
Cash flows from financing activities:
Repayment of long-term debt (108,380) (4,184)
Proceeds from the issuance of common stock 375 19,750
Borrowings of long-term debt 100,348 ---
Net borrowings (payments) under revolving line of credit (13,000) ---
Repurchase of common stock (21,441) (56,166)
----------------- ------------------
Net cash used in financing activities (42,098) (40,600)
----------------- ------------------
Net increase/(decrease) in cash 2,631 (24,918)
Cash at beginning of period 6,939 35,437
----------------- ------------------
Cash at end of period $ 9,570 $10,519
================= ==================
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 6,057 $ 5,559
Cash paid during the period for income taxes $ 560 $ 1,335
Non-cash financing activities:
Stock issued under stock-based compensation plan $ 2,169 $ 2,338
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
VALASSIS COMMUNICATIONS, INC.
Notes to Condensed Consolidated Financial Statements
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, the information
contained herein reflects all adjustments necessary for a fair presentation of
the information presented. All such adjustments are of a normal recurring
nature. The results of operations for the interim periods are not necessarily
indicative of results to be expected for the fiscal year. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998. Certain amounts for 1998 have been reclassified to conform to
current period classifications.
2. Contingencies
On February 24, 1999, the Company commenced litigation against The
News Corporation Limited ("News Corp") and News America Incorporated ("News
America") in the State of Michigan Circuit Court for the County of Wayne. The
Complaint seeks $150 million in compenstory damages, $300 million in punitive
damages and injunctive relief based on allegations of tortious interference
with prospective contractual relations and aiding and abetting a breach of
fiduciary duty. The principal factual allegation is that Arthur Andersen LLP
("Arthur Andersen"), with the inducement of News Corp and News America,
repudiated a joint venture agreement with the Company relating to the
development of a new product. On April 7, 1999, Arthur Andersen rejected
alternative dispute resolution and filed a declaratory judgment action in the
Chancery Division of the Cook County, Illinois Circuit Court. This action asks
the Illinois Court to make a determination as to whether the Company and Arthur
Andersen had a contract. The Company has filed a motion to dismiss this Illinois
action.
On April 12, 1999, the Company amended its lawsuit against News Corp
and News America to add Arthur Andersen as a defendant. News Corp and News
America filed a motion to dismiss the case against News Corp and News America
for lack of jurisdiction. On May 7, 1999, the Court found that Michigan
jurisdiction was proper and denied their motion. The time for defendants to
answer or move with respect to the Complaint has not yet expired.
The Company is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position, results of operations or liquidity.
3. Supplemental Benefit Plan
The Company established a Supplemental Benefit Plan (the "Plan") in
1998. The Plan covers management employees who are designated by the Company's
Compensation/Stock Option Committee. Participating employees earn credited
service for each year of continuous service with the Company. The annual amount
of supplemental benefit is calculated by multiplying a participant's years of
credited service by one and one-half percent of the participant's average annual
base pay while employed by the Company 36 months immediately preceding
retirement or other termination of employment. The amount of supplemental
benefit provided by the Plan is payable semi-annually for a period of ten years,
commencing upon retirement, death or other termination of employment.
Supplemental benefits are provided on a non-contributing basis. Expense
associated with the cost of future benefits under the Plan for the quarter ended
March 31, 1999 totaled approximately $148,000.
4. Subsequent Event
On April 1, 1999, the Board of Directors approved a three-for-two
split of the Company's Common Stock, effected in the form of a 50% stock
dividend, issued May 12, 1999, to stockholders of record as of April 16, 1999.
Accordingly, all common share and per common share data have been restated to
reflect this stock split. The stock split was accomplished through the issuance
of 16,481,134 new shares and the use of 2,536,462 shares of Treasury Stock.
6
<PAGE>
5. Segment Reporting
The Company has two reportable segments, cooperative free-standing
inserts (FSIs) and Valassis Impact Promotions (VIP). FSIs are four-color
booklets containing promotions from multiple advertisers distributed through
Sunday newspapers. VIP offers its customers individualized specialty print
promotion products in customized formats. These reportable segments are
strategic business units that offer different products and services. They are
managed separately because each business requires different marketing strategies
and caters to a different customer base.
Assets are not allocated to reportable segments and are not used to assess the
performance of a segment. Intersegment sales are accounted for at cost.
<TABLE>
<CAPTION>
(in millions) Three Months Ended March 31
- ------------- -----------------------------------------------------
FSI VIP All Others* Total
1999 ---------- ---------- -------------- ---------
----
<S> <C> <C> <C> <C>
Revenues from external customers $167.7 $34.0 $20.3 $222.0
Intersegment revenues 2.2 --- --- 2.2
Depreciation/amortization 2.8 0.5 --- 3.3
Segment profit 50.9 3.1 0.7 54.7
1998
----
Revenues from external customers $156.8 $29.9 $18.3 $205.0
Intersegment revenues 1.8 --- --- 1.8
Depreciation/amortization 3.6 0.3 --- 3.9
Segment profit 38.5 2.3 0.8 41.6
</TABLE>
* Segments below the quantitative thresholds are primarily attributable to four
segments of the Company. Those segments include a product sampling business, a
sales promotion company in Canada, a run-of-press business, and a promotion
security service. None of these segments has met any of the quantitative
thresholds for determining reportable segments.
Reconciliations to consolidated financial statement totals are as follows:
Three Months Ended March 31,
---------------------------------
1999 1998
--------------- --------------
Profit for reportable segments $54.0 $40.8
Profit for other segments 0.7 0.8
Unallocated amounts:
Interest income 0.2 0.7
--------------- --------------
Earnings before taxes $54.9 $42.3
--------------- --------------
Domestic and foreign revenues for each of the three-month periods ended March 31
were as follows:
1999 1998
------- --------
United States $216.4 $200.2
Canada 5.8 5.5
------- --------
Total $222.2 $205.7
======= ========
7
<PAGE>
6. Earnings Per Share
Earnings per common share ("EPS") data were computed as follows:
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-----------------------------
1999 1998
------------- ------------
(in thousands except for
per share amounts)
<S> <C> <C>
Net Earnings $33,891 $26,047
============= ============
Basic EPS:
Weighted average common shares outstanding 57,119 60,170
============= ============
Earnings per common share - basic $ 0.59 $ 0.43
============= ============
Diluted EPS:
Weighted average common shares outstanding 57,119 60,170
Weighted average shares purchased on exercise of dilutive options 4,364 2,616
Shares purchased with proceeds of options (3,267) (1,962)
Shares contingently issuable 29 11
------------- ------------
Shares applicable to diluted earnings 58,245 60,835
============= ============
Earnings per common share - diluted $ 0.58 $ 0.43
============= ============
</TABLE>
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Certain statements under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations," constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks and
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such factors include, among others, the following: a new
competitor in the Company's core free-standing insert business and consequent
price war; new technology that would make free-standing inserts less attractive;
a shift in customer preference for different promotional materials, promotional
strategies or coupon delivery methods, including in-store advertising systems
and other forms of coupon delivery; the inability of material third parties upon
which the Company relies to be Year 2000 compliant in a timely manner; an
increase in the Company's paper costs; or general business and economic
conditions. The Company disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
Results of Operations
Total revenues increased 8.0% from $205.7 million for the first quarter of 1998
to $222.2 million for the first quarter of 1999. Free-standing insert (FSI)
revenues were up 7.0% from $156.8 million for the quarter ended March 31, 1998
to $167.7 million for the same quarter of 1999. This increase is the result of
continued industry page growth and moderate price increases, despite one less
FSI publishing date during the first quarter of 1999 than in 1998. Retail
Services revenues, which include Valassis Impact Promotions (VIP) and the newly-
developed Customer Attainment and Retention System (CARS), were up 16% to $34.8
million compared to $29.9 million in the prior-year period. This increase is a
result of continued strong demand from VIP's traditional customer base of food
service companies.
Gross profit margin was 37.7% in the first quarter of 1999, up from 34.9% in the
first quarter of 1998. This was primarily the result of the continued decline
in the Company's three major cost components, paper, media and printing on a per
unit basis. The Company recently negotiated multi-year contracts with several
major suppliers of coated groundwood paper designed to stabilize paper costs.
The contracts, which stipulate pricing collars preventing the price of paper
from going up or down more than 6-10% in any 12-month period, represent over 75%
of the Company's paper requirements.
Selling, general and administrative expenses increased from $18.5 million in the
first quarter of 1998 to $20.2 million in the first quarter of 1999. This is
primarily the result of higher incentive plan costs as a result of stronger
sales and profits in the first quarter of 1999 as compared to the same period in
1998, as well as costs associated with new business development.
As a result of the Company's recently completed multi-phased debt-restructuring
plan, interest expense was down for the quarter ended March 31, 1999. The debt-
restructuring plan included the addition of a $160 million unsecured bank
facility, a ratings upgrade by both Moody's and S&P, the repurchase of $125.1
million of the Company's senior notes due 2003, and the issuance of $100 million
in senior notes due 2009.
9
<PAGE>
Net earnings were $33.9 million for the first quarter of 1999 versus $26.0
million for the same period last year. These improved results were primarily
the result of strong FSI sales.
Financial Condition, Liquidity and Sources of Capital
The Company's liquidity requirements arise mainly from its working capital
needs, primarily accounts receivable, inventory and debt service requirements.
The Company does not offer financing to its customers. FSI customers are billed
for 75% of each order eight weeks in advance of the publication date and are
billed for the balance immediately prior to the publication date. The Company
inventories its work in progress at cost while it accrues progress billings as a
current liability at full sales value. Although the Company receives
considerable payments from its customers prior to publication of promotions,
revenue is recognized only upon publication dates. Therefore, the progress
billings on the balance sheet include any profits in the related receivables and
accordingly, the Company can operate with low, or even negative, working
capital.
Cash and cash equivalents totaled $9.6 million at March 31, 1999 versus $10.5
million at March 31, 1998. This was the result of cash provided by operating
activities of $47.5 million, and cash used in investing activities and financing
activities of $2.7 million and $42.1 million, respectively, in the first quarter
of 1999.
Cash flow from operating activities increased from $21.6 million at March 31,
1998 to $47.5 million at March 31, 1999 as a result of increased earnings and
other positive working capital changes.
During the first quarter of 1999, the Company retired $107 million in debt due
March 1999 using amounts borrowed under its $160 million Revolving Credit
Facility and $17 million of existing cash. As of March 31, 1999 the Company's
debt has been reduced to $319 million, which consists of $90 million under its
Revolving Credit Facility, $100 million of its 6-5/8% Senior Notes due 2009 and
$129 million of its 9.55% Senior Notes due 2003.
The Company intends to use cash generated by operations to meet interest and
principal repayment obligations, for general corporate purposes, to reduce its
indebtedness and from time to time to repurchase stock through the Company's
stock repurchase program. As of March 31, 1999, the Company had authorization to
repurchase an additional 1.8 million shares of its common stock under its
existing share repurchase program.
Management believes that the Company will generate sufficient funds from
operations and will have sufficient lines of credit available to meet currently
anticipated liquidity needs, including interest and required payments of
indebtedness.
Capital Expenditures - The Company operates three printing facilities. Capital
expenditures were $1.9 million for the three month period ended March 31, 1999.
Management expects future capital expenditure requirements of approximately $10
million to $15 million over each of the next three to five years to meet
increased capacity needs and to replace or rebuild equipment as required. It is
expected that equipment will be purchased using funds provided by operations.
10
<PAGE>
Year 2000 Compliance
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than 2000. This problem could force computers to
either shut down or generate erroneous data or information.
In response to the Year 2000 issue, the Company has implemented a multi-faceted
project plan, which covers both IT and non-IT systems. This plan encompasses
three areas: (1) program modifications; (2) implementing new financial software
upgrades; and (3) testing readiness of vendors and customers. Phases associated
with the project plan are: identification and ranking of components of the
Company's systems and equipment and those of its suppliers that may be
vulnerable to Year 2000 problems; assessment of those components; remediation or
replacement of non-compliant systems and components; testing of systems and
components following remediation; and the development of contingency plans.
With regard to program modification and implementing new software upgrades, the
Company has completed its plan and has all critical systems Year 2000 compliant.
With regard to readiness of vendors and customers, the Company is currently in
the assessment phase and will have testing plans completed by June 30, 1999.
The Company's plans include the development of a full contingency plan. The
Company believes that by June 30, 1999, it will be able to fully determine its
most likely worst case scenarios and will have its contingency plans in place.
Potential sources of risk include the inability of suppliers (principally paper
suppliers) to be Year 2000 compliant in a timely manner, which could result in
delays in product deliveries from such suppliers, the disruption of the
distribution of the Company's products to the consumer, and disruption of the
Company's own production facilities as a result of general failure of necessary
infrastructure such as electricity supply.
The Company estimates the total costs related to the implementation of the
program modification plan and the financial software upgrade plan to be
approximately $400,000 and $300,000, respectively, which will be funded through
operating cash flows and expensed as incurred. To date, expenses have totaled
approximately $300,000 for program modifications and $30,000 for financial
software upgrades. It is not possible to quantify the aggregate cost to the
Company with respect to vendors, service providers and customers who fail to
become Year 2000 compliant. This is a Year 2000 Readiness Disclosure Statement
within the meaning of the Year 2000 Information and Readiness Disclosure Act
(P.L. 105-271).
11
<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
The following exhibits are included herein:
(3)(ii) By-Laws
(27) Financial Data Schedule
b. Form 8-K
The Company filed a report on Form 8-K, dated January 12, 1999, announcing
the completion of a debt-restructuring plan.
12
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 14, 1999
Valassis Communications, Inc.
(Registrant)
By: /s/Robert L. Recchia
----------------------------------------
Robert L. Recchia
V.P. of Finance - Chief Financial Officer
Signing on behalf of the Registrant and as
principal financial officer.
13
<PAGE>
EFFECTIVE MARCH 22, 1999
AMENDED AND RESTATED
BY-LAWS
OF
VALASSIS COMMUNICATIONS, INC.
(the "Corporation")
ARTICLE I
Offices
SECTION 1. Registered Office. The registered office of the
Corporation shall be located in Wilmington, Delaware.
SECTION 2. Other Offices. The Corporation may also have offices
at such other places as the Board of Directors may from time to time determine
or the business of the Corporation may require.
ARTICLE II
Meetinqs of Stockholders
SECTION 1. Annual Meetings. The annual meeting of stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held at such date and time,
<PAGE>
within or without the State of Delaware, as the Board of Directors shall
determine.
SECTION 2. Special Meeting. Special meetings of stockholders for the
transaction of such business as may properly come before the meeting may be
called by order of the Board of Directors, the Chairman, the President, the
Secretary or any Assistant Secretary and shall be called by any such officer at
the request in writing of stockholders holding together at least a majority of
all the shares of the Corporation issued and outstanding and entitled to vote at
the meeting, and shall be held at such date and time, within or without the
State of Delaware, as may be specified by such order.
SECTION 3. Notice. Written notice of all meetings of stockholders
shall be given to each stockholder of record who is entitled to vote at such
meetings, stating the place, date, and time of the meeting, and, in the case of
a special meeting, the purpose or purposes for which the meeting is called.
Except as otherwise provided by law, a copy of the notice of any meeting shall
be given, personally, by mail or by telecopy, not less than ten days nor more
than sixty days before the date of the meeting, and directed to each stockholder
of record at his record address. Notice by mail shall be deemed to be given when
deposited, with postage thereon prepaid, in the United States mails. If a
meeting is
-2-
<PAGE>
adjourned to another time, not more than thirty days thereafter, and/or to
another place, and if an announcement of the adjourned time and/or place is made
at the meeting, it shall not be necessary to give notice of the adjourned
meeting unless, after adjournment, a new record date is fixed for the adjourned
meeting.
SECTION 4. Stockholder List. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city or other municipality or community
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place where the
meeting is to be held and during the whole time of the meeting, and may be
inspected by any stockholder who is present.
SECTION 5. Proxy Representation. Every stockholder may authorize
another person or persons to act
-3-
<PAGE>
for him by proxy in all matters in which a stockholder is entitled to
participate, whether by waiving notice of any meeting, voting or participating
at a meeting, or expressing consent or dissent without a meeting. Every proxy
must be signed by the stockholder granting such proxy or by his attorney-in-
fact. No proxy shall be voted or acted upon after three years from its date
unless such proxy provides for a longer period. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and, if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power.
SECTION 6. Quorum; Adjourments. Except as otherwise provided by law, a
quorum for the transaction of business at any meeting of stock holders shall
consist of the holders of record of a majority of the shares of the capital
stock of the Corporation, issued and outstanding, entitled to vote at the
meeting, present in person or by proxy. In the absence of a quorum at any
meeting or any adjournment thereof, the holders of record of a majority of the
shares present in person or by proxy and entitled to vote at such meeting may
adjourn such meeting from time to time. At any such adjourned meeting at which
a quorum is present any business may be transacted which might have been
transacted at the meeting as originally called.
-4-
<PAGE>
SECTION 7. Conduct of Meeting. Meetings of stockholders shall be
presided over by the Chairman, or in his absence, a chairman chosen by a
plurality of the directors, or, if not so chosen, by the stockholders entitled
to vote who are present in person or by proxy at the meeting. The Secretary of
the Corporation shall act as secretary of every meeting, but if the Secretary is
not present, the presiding officer of the meeting shall appoint any person
present to act as secretary of the meeting.
SECTION 8. Voting. At each meeting of stockholders, each stockholder
entitled to vote any shares on any matter to be voted upon at such meeting shall
be entitled to one vote on such matter for each such share. In the election of
directors, a plurality of the votes cast shall elect. Any other action shall be
authorized by a majority of the votes cast, except as otherwise provided by law.
Voting by ballot shall not be required for the election of directors or any
other corporate action, except as otherwise provided by law.
SECTION 9. Written Consent of Shareholders Without a Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required to
be taken at any annual or special meeting of stockholders of the Corporation, or
any action which may be taken at any annual or special meeting of such
stockholders, may be taken without
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a meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken and the date of signature, shall be signed by
the holders of outstanding stock having no less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted, and delivered within
60 days of signing to the Corporation either at its registered office in
Delaware, its principal place of business or to the officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
shareholders are recorded. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
Directors
SECTION 1. Functions and Definition. The business and affairs of the
Corporation shall be managed by, or under the direction of, the Board of
Directors. The use of the phrase "whole Board" herein refers to the total number
of directors which the Corporation would have if there were no vacancies.
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SECTION 2. Qualifications and Number. A director need not be a
stockholder, a citizen of the United States, or a resident of the State of
Delaware. The number of directors constituting the whole Board shall not be less
than one, nor more than twelve. The number of directors may be modified by
resolution of the Board of Directors, but in no event shall the number of
directors be less than one.
SECTION 3. Election and Term. The initial Board of Directors shall be
elected by the Incorporator and shall hold office until the first annual meeting
of stockholders or until their successors are elected and qualified or until
their earlier resignation or removal. Thereafter, directors who are elected at
an annual meeting of stockholders, and directors who are elected in the interim
to fill vacancies and newly created directorships, shall hold office until the
next annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. At each meeting of the
stockholders for the election of directors, provided a quorum is present, the
directors shall be elected by a plurality of the votes validly cast in such
election.
SECTION 4. Annual Meeting. Following each annual election of
directors, the newly elected Board shall meet for the purpose of the election
of officers and the transaction
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of such other business as may properly come before the meeting.
SECTION 5. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such time and place as the Board of Directors shall
from time to time by resolution determine.
SECTION 6. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the direction of the Chairman,
President, any Vice President, the Secretary, or any Assistant Secretary, and
shall be called by any such officer at the request of any three directors or at
the request in writing of stockholders owning more than 40% of the outstanding
capital stock of the Corporation or by any three directors of the Corporation.
SECTION 7. Place. Meetings of the Board of Directors may be held at
any place within or without the State of Delaware.
SECTION 8. Notice. A notice of the place, date and time of each
regular meeting of the Board of Directors shall be given to each director by
mailing the same not less than seven and not more than twenty-eight days before
the meeting, or by telegraphing, telexing, telecopying or telephoning the same
or by delivering the same personally not less than four and not more than
fourteen days before the meeting, at the residence address of each director or
at his
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usual place of business. Special meetings of the Board of Directors may be
called on 24 hours' notice, if notice is given to each director personally by
telephone, by telecopier or by telegram, or on five days' notice if notice is
mailed to each director in the United States or, if such notice is sent outside
the United States, by overnight courier (next or two-day delivery guaranteed),
to each director addressed to him at the residence address of each director or
at his usual place of business.
SECTION 9. Quorum. Except as otherwise provided by law, the
Certificate of Incorporation or these By-Laws, at all meetings of the Board of
Directors, a majority of the entire Board of Directors shall constitute a quorum
for the transaction of business and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
SECTION 10. Organization. At all meetings of the Board of Directors,
the Chairman, or in his absence a director chosen by a plurality of the
directors present at such meeting shall preside. The Secretary of the
Corporation shall act as secretary at all meetings of the Board of
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Directors when present, and, in his absence, the presiding officer may appoint
any person to act as secretary.
SECTION 11. Resignation and Removal of Directors. Any director may
resign at any time, and such resignation shall take effect upon receipt thereof
by the Chairman, President or Secretary, unless otherwise specified in the
resignation. Any or all of the directors may be removed, with or without cause,
by the holders of a majority of the shares of stock outstanding and entitled to
vote for the election of directors. Any vacancy in the Board of Directors caused
by any such removal may be filled at such meeting by the stockholders entitled
to vote for the election of the director so removed. If such stockholders do not
fill such vacancy at such meeting (or in the written instrument effecting such
removal, if such removal was effected by consent without a meeting), such
vacancy may be filled in the manner provided in Section 12 of these By-Laws.
SECTION 12. Vacancies. Unless otherwise provided in the Certificate of
Incorporation or in these By-Laws, vacancies among the directors, whether
caused by resignation, death, disqualification, removal, an increase in the
authorized number of directors or otherwise, may be filled by a resolution duly
adopted by a majority of the directors then in office, although less than a
quorum. A Director elected to fill a vacancy or a newly created directorship
shall hold
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office until his successor has been elected and qualified or until his earlier
death, resignation or removal. Any such vacancy or newly created directorship
may also be filled at any time by vote of the stockholders.
SECTION 13. Action Without a Meeting. Any action required or permitted
to be taken by the Board of Directors or a committee thereof may be taken
without a meeting if all members of the Board or the committee consent in
writing to the adoption of a resolution authorizing the action. The resolution
and the written consents thereto by the members of the Board or committee shall
be filed with the minutes of the proceedings of the Board or committee.
SECTION 14. Telephone, etc. Meetings. Members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or committee, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
SECTION 15. Reliance. A board or committee member shall be fully
protected in relying in good faith upon the records of the corporation and upon
information, opinions, reports, or statements presented to the corporation by
its officers and employees, board committees, or any other person
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as to matters the board or committee member reasonably believes are within such
other person's professional or expert competence and who has been selected with
reasonable care.
SECTION 16. Interested Directors. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors
or officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof
which authorizes the contract or transaction, or solely because his or their
votes are counted for such purpose if (i) the material facts as to his or
their relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum, or
(ii) the material facts as to his or their relationship or interest and as to
the contract or transaction are disclosed or are known to the
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stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders, or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified, by the Board of Directors, a committee thereof
or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
ARTICLE IV
Committees
SECTION 1. Executive Committee. The Board of Directors, by a
resolution passed by a vote of a majority of the whole Board, may appoint an
Executive Committee of one or more directors which, except as otherwise provided
by the Board of Directors, shall have and exercise all the powers of the Board
of Directors in the management of the property, business and affairs of the
Corporation, including the power and authority to issue stock, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it; provided, however, that the Executive Committee shall not have any
power or authority to:
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(a) declare cash dividends,
(b) amend the Certificate of Incorporation (except that a Committee
may, to the extent authorized in the resolution or resolutions providing for
the issuance of shares of stock adopted by the Board of Directors as provided in
Section 151(a) of the General Corporation Law, fix the designations and any of
the preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the Corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
Corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series),
(c) adopt an agreement of merger or consolidation,
(d) recommend to the stockholders the sale, lease or exchange of all
or substantially all of the Corporation's property and assets, or
(e) recommend to the stockholders a dissolution of the Corporation or
a revocation of a dissolution. The Board of Directors shall appoint the
Chairman of the Executive Committee and may designate one or more directors as
alternate members of the Executive Committee, who may replace any absent or
disqualified member at any meeting of the Executive Committee. Vacancies on
the Executive
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Committee shall be filled by the Board of Directors in the same manner as
original appointments to such Committee.
SECTION 2. Other Committees. From time to time the Board of Directors
by a resolution adopted by a majority of the whole Board may appoint any other
committee or committees of one or more directors for any purpose or purposes, to
the extent lawful, which shall have such powers as shall be determined and
specified by the Board of Directors in the resolution of appointment, except
that no committee shall have the power or authority to take the actions set
forth in paragraphs (a), (b), (c) or (d) of Section 1 of Article IV above.
SECTION 3. Procedures Applicable to All Committees. Each committee
shall fix its own rules of procedure, and shall meet where and as provided by
such rules or by resolution of the Board of Directors. The presence of a
majority of the then appointed members of a committee shall constitute a quorum
for the transaction of business by that committee, and in every case where a
quorum is present the affirmative vote of a majority of the members of the
committee present shall be the act of the committee. Any action required or
permitted to be taken at any meeting of any such Committee may be taken without
a meeting, if all members of such Committee, shall consent to such action in
writing and such writing or writings are filed with the
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minutes of the proceedings of the Committee. Each committee shall keep minutes
of its proceedings, and any action taken by a committee shall be reported to
the Board of Directors at its meeting next succeeding such action.
SECTION 4. Action by Telephonic Communications.
Members of any Committee designated by the Board of Directors may participate in
a meeting of such Committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
provision shall constitute presence in person at such meeting.
SECTION 5. Absent or Disqualified Members. In the absence or
disqualification of a member of any Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member.
SECTION 6. Termination of Committee Membership.
In the event any person shall cease to be a director of the Corporation, such
person shall simultaneously therewith cease to be a member of any committee
appointed by the Board of Directors. Any member (and any alternate member) of
any
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Committee may be removed at any time, either for or without cause, by
resolution adopted by the Board of Directors.
ARTICLE V
Officers
SECTION 1. Executive Officers. The executive officers of the
Corporation shall be a President, a Treasurer and a Secretary, all of whom
shall be elected annually by the Board of Directors. The Board of Directors, in
its discretion, may choose any one or more Vice Presidents. The Board of
Directors, in its discretion, may choose a Chairman of the Board (who must be a
director), who need not be a shareholder. Unless otherwise provided in the
resolution of election, each officer shall hold office until the next annual
election of directors and until his successor shall have been elected and
qualified or until his earlier resignation or removal. Any number of offices
may be held by the same person unless otherwise prohibited by law.
SECTION 2. Other Officers. The Board of Directors may appoint one or
more Assistant Secretaries or Assistant Treasurers as it may deem necessary or
advisable, for such term as the Board of Directors shall fix in such
appointment, who shall have such authority and perform such duties as may from
time to time be prescribed by the Board.
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SECTION 3. Resignation and Removal. Any officer may resign his office
at any time and such resignation shall take effect upon receipt thereof by the
Chairman, the President or the Board of Directors, unless otherwise specified
in the resignation. All officers, agents and employees of the Corporation
shall be subject to removal, with or without cause, at any time by a resolution
of the Board. The power to remove agents and employees, other than officers or
agents elected or appointed by the Board of Directors, may be delegated as the
Board of Directors shall determine.
SECTION 4. The Chairman. The Chairman, if there be one, shall preside
at all meetings of the stockholders and directors at which he is present. He
shall have the same authority as the President to sign, in the name and on
behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and
other documents and instruments in connection with the business of the
Corporation, and together with the Secretary or an Assistant Secretary,
conveyances of real estate and other documents and instruments to which the seal
of the Corporation is affixed. The Chairman shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
SECTION 5. The President. The President shall, subject to the control
of the Board of Directors and, if
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there be one, the Chairman of the Board of Directors, have general supervision
of the business of the Corporation and shall see that all orders and resolutions
of the Board of Directors are carried into effect. The President shall be the
Chief Executive Officer of the Corporation. He shall execute all bonds,
mortgages, contracts and other instruments of the Corporation requiring a seal,
under the seal of the Corporation, except where required or permitted by law to
be otherwise signed and executed and except that the other officers of the
Corporation may sign and execute documents when so authorized by these By-Laws,
the Board of Directors or the President. The President shall also perform such
other duties and may exercise such other powers as from time to time may be
assigned to him by these By-Laws or by the Board of Directors.
SECTION 6. The Vice Presidents. Each Vice President, if there be any,
shall perform such duties and exercise such powers as may be assigned to him
from time to time by a resolution of a majority of the Board of Directors. In
the absence of the President, the duties of the President shall be performed and
his powers may be exercised by any such Vice President as shall be designated by
the President,
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or failing such designation, such duties shall be performed and such powers may
be exercised by each Vice President in the order of their earliest election to
that office; subject in any case to review and superseding action by the
President.
SECTION 7. The Treasurer. The Treasurer shall be the chief financial
officer of the Corporation and shall have the following powers and duties:
(a) The Treasurer shall have charge and supervision over and be
responsible for the moneys, securities, receipts and disbursements of the
Corporation, and shall keep or cause to be kept full and accurate records of all
receipts of the Corporation.
(b) He shall cause the moneys and other valuable effects of the
Corporation to be deposited in the name and to the credit of the Corporation in
such banks or trust companies or with such bankers or other depositaries as
shall be selected by the Board of Directors, the Chairman, the President or a
Vice President.
(c) He shall cause the moneys of the Corporation to be disbursed by
checks or drafts upon the authorized depositaries of the Corporation and cause
to be taken and preserved proper vouchers for all moneys disbursed.
(d) He shall render to the Board of Directors or the President,
whenever requested, a statement of the
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financial condition of the Corporation and of all his transactions as
Treasurer, and render a full financial report at the annual meeting of the
stockholders, if called upon to do so.
(e) He shall be empowered from time to time to require from all
officers or agents of the Corporation reports or statements giving such
information as he may desire with respect to any and all financial transactions
of the Corporation.
(f) He may sign (unless an Assistant Treasurer or the Secretary or an
Assistant Secretary shall have signed) certificates representing stock of the
Corporation the issuance of which shall have been authorized by the Board of
Directors.
(g) He shall perform, in general, all duties incident to the office of
treasurer and such other duties as may be specified in these By-Laws or as may
be assigned to him from time to time by the Board of Directors, or the
President.
(h) In the absence of the President and any Vice Presidents, the
duties of the President shall be performed by the Treasurer.
SECTION 8. The Secretary. The Secretary shall have the following
powers and duties:
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(a) The Secretary shall keep or cause to be kept a record of all the
proceedings of the meetings of the stockholders and of the Board of Directors
in books provided for that purpose and shall be entitled to attend all meetings
of the Board of Directors.
(b) The Secretary shall cause all notices to be duly given in
accordance with the provisions of these By-Laws and as required by law.
(c) Whenever any Committee shall be appointed pursuant to a resolution
of the Board of Directors, the Secretary shall furnish a copy of such resolution
to the members of such Committee.
(d) The Secretary shall be the custodian of the records and of the
seal of the Corporation and cause such seal (or a facsimile thereof) to be
affixed to all certificates representing shares of the Corporation prior to the
issuance thereof and to all instruments the execution of which on behalf of the
Corporation under its seal shall have been duly authorized in accordance with
these By-Laws, and when so affixed he may attest the same.
(e) The Secretary shall properly maintain and file all books, reports,
statements, certificates and all other documents and records required by law,
the Certificate of Incorporation or these By-Laws.
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(f) The Secretary shall have charge of the stock books and ledgers of
the Corporation and shall cause the stock and transfer books to be kept in such
manner as to show at any time the number of shares of stock of the Corporation
of each class issued and outstanding, the names and the addresses of the
holders of record of such shares, the number of shares held by each holder and
the date as of which each became such holder of record.
(g) The Secretary shall sign (unless the Treasurer, an Assistant
Treasurer or Assistant Secretary shall have signed) certificates representing
shares of the Corporation the issuance of which shall have been authorized by
the Board of Directors.
(h) The Secretary shall perform, in general, all duties incident to
the office of secretary and such other duties as may be specified in these By-
Laws or as may be assigned to him from time to time by the Board of Directors,
or the President.
ARTICLE VI
Stock
SECTION 1. Certificates of Stock, Uncertificated Shares. The shares of
the Corporation shall be represented by certificates, provided that the Board
of Directors may
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provide by resolution or resolutions that some or all of any or all classes or
series of the stock of the Corporation shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until each
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock in the
Corporation represented by certificates and upon request every holder of
uncertificated shares shall be entitled to have a certificate signed by, or in
the name of the Corporation, by the President or a Vice President, and by the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary,
representing the number of shares registered in certificate form. Such
certificate shall be in such form as the Board of Directors may determine, to
the extent consistent with applicable law, the Certificate of Incorporation and
these By-Laws.
The Corporation may issue a new certificate of stock in place of any certificate
theretofore issued by it, alleged to have been lost, stolen or destroyed, and
the Board of Directors may require the owner of any lost, stolen, or destroyed
certificate, or his legal representative, to give the Corporation a bond
sufficient to indemnify the Corporation against any claim that may be made
against it on
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account of the alleged loss, theft, or destruction of any such certificate or
the issuance of any such new certificate.
SECTION 2. Stock Transfers. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares, duly endorsed or
accompanied by appropriate evidence of succession, assignment or authority to
transfer, the Corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Within a reasonable time after the transfer of uncertificated stock, the
Corporation shall send to the registered owner thereof a written notice
containing the information required to be set forth or stated on certificates
pursuant to Sections 151, 156, 202(a) or 218(a) of the General Corporation Law
of the State of Delaware. Subject to the provisions of the Certificate of
Incorporation and these By-Laws, the Board of Directors may prescribe such
additional rules and regulations as it may deem appropriate relating to the
issue, transfer and registration of shares of the Corporation.
SECTION 3. Record Date for Stockholders. For the purpose of
determining the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent or dissent from
any corporate action in writing without a meeting, or for the purpose of
determining the stockholders entitled to receive payment of
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any dividend or other distribution or the allotment of any rights, or entitled
to exercise any rights in respect of any change, conversion, or exchange of
stock or for the purpose of any other lawful action, the Board of Directors may
fix, in advance, a date as the record date for any such determination of
stockholders, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote of a meeting of stockholders shall apply to any adjournment of the meeting;
provided however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 4. Dividends. The Board of Directors shall have the right,
subject to any applicable provisions of law and the Certificate of
Incorporation, to declare dividends to the Corporation's stockholders in any
amount whatsoever out of those moneys legally available under applicable state
law.
SECTION 5. Registered Stockholders. Prior to due surrender of a
certificate for registration of transfer, the Corporation may treat the
registered owner as the person exclusively entitled to receive dividends and
other distributions, to vote, to receive notice and otherwise to exercise all
the rights and powers of the owner of the shares
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represented by such certificate, and the Corporation shall not be bound to
recognize any equitable or legal claim to or interest in such shares on the part
of any other person, whether or not the Corporation shall have notice of such
claim or interests. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the Corporation for transfer
or uncertificated shares are requested to be transferred, both the transferor
and transferee request the Corporation to do so.
ARTICLE VII
Waiver of Notice
Any person may waive any notice required to be given by law, in the
Certificate of Incorporation or under these By-Laws (i) by attendance in person,
or by proxy if a stockholder, at any meeting, except when such person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened, or (ii) by a writing signed by the person or persons entitled to
said notice, whether before or after the time stated in said notice, which
waiver shall be deemed equivalent to such
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notice. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
ARTICLE VIII
General Provisions
SECTION 1. Contracts. The Chairman, President, any Vice President, the
Secretary or Treasurer may enter into any contract or execute and deliver any
instrument in the name and on behalf of the Corporation. The Board of Directors
may authorize any officer or officers, agent or agents, in the name and on
behalf of the Corporation, to enter into or execute and deliver any and all
deeds, bonds, mortgages, contracts and other obligations or instruments, and
such authority may be general or confined to specific instances.
SECTION 2. Sale, Transfer, etc. of Securities. To the extent
authorized by the Board of Directors or by the Chairman, President, or any Vice
President, the Secretary or the Treasurer or any other officers designated by
the Board of Directors or the President may sell, transfer, endorse, and assign
any shares of stock, bonds or other securities owned by or held in the name of
the Corporation, and may
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make, execute and deliver in the name of the Corporation, under its corporate
seal, any instruments that may be appropriate to effect any such sale, transfer,
endorsement or assignment.
SECTION 3. Voting as Stockholder. Unless otherwise determined by
resolution of the Board of Directors, the Chairman, President or any Vice
President shall have full power and authority on behalf of the Corporation to
attend any meeting of stockholders of any corporation in which the Corporation
may hold stock, and to act, vote (or execute proxies to vote) and exercise in
person or by proxy all other rights, powers and privileges incident to the
ownership of such stock. Such Officers acting on behalf of the Corporation
shall have full power and authority to execute any instrument expressing
consent to or dissent from any action of any such corporation without a
meeting. The Board of Directors may by resolution from time to time confer such
power and authority upon any other person or persons.
SECTION 4. Corporate Seal. The seal of the Corporation shall be
circular in form and contain the name of the Corporation and the words
"Corporate Seal" and "Delaware," which seal shall be in charge of the Secretary
to be used as directed by the Board of Directors.
SECTION 5. Fiscal Year. The fiscal year of the Corporation shall be
fixed, and shall be subject to change,
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by the Board of Directors. Unless otherwise fixed by the Board of Directors, the
fiscal year of the Corporation shall commence on the first day of January of
each year (except for the Corporation's first fiscal year which shall commence
on the date of incorporation) and shall terminate in each case on December 31.
ARTICLE IX
Exculpation and Indemnification
SECTION 1. Exculpation. No person who is or was a director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director unless, and only
to the extent that, such director is liable (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware or any amendment thereto or successor provision thereto, or
(iv) for any transaction from which the director derived an improper personal
benefit. No amendment to, repeal or adoption of any provision of the Certificate
of Incorporation inconsistent with this Article shall apply to or have any
effect on the liability of any
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director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment, repeal, or adoption of an
inconsistent provision. If the General Corporation Law of the State of Delaware
hereafter is amended to authorize the further elimination or limitation of the
liability of directors, then the liability of a director of the Corporation, in
addition to the limitation on personal liability provided herein, shall be
limited to the fullest extent permitted by the amended General Corporation Law
of the State of Delaware.
SECTION 2. Who May Be Indemnified. (a) Actions, Suits and Proceedings
Other Than by or in the Right of the Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted
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<PAGE>
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) Actions or Suits By or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the Corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
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<PAGE>
reasonably believed to be in or not opposed to the best interests of the
Corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) Indemnification for Expenses. To the extent that a director,
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
paragraph (a) or (b), or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Determination of Entitlement to Indemnification. Any
indemnification of a director or officer of the Corporation under paragraph (a)
or (b) hereof (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination
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<PAGE>
that indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in paragraph (a) or (b) of this section. Such determination shall be made
(1) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.
(e) Good Faith Defined. For purposes of any determination under
Sections 2(a), 2(b) or 2(d) of this Article IX, a person shall be deemed to
have acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, or, with respect to any
criminal action or proceeding, to have no reasonable cause to believe his
conduct was unlawful, if his action is based on the records or books of account
of the Corporation or another enterprise, or on information supplied to him by
the officers of the Corporation or another enterprise in the course of their
duties, or on the advice of legal counsel for the Corporation or another
enterprise or on information or records given or reports made to the Corporation
or another enterprise by an independent certified public accountant or by an
appraiser or other expert selected
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<PAGE>
with reasonable care by the Corporation or another enterprise. The term
"another enterprise" as used in this Section 4 shall mean any other corporation
or partnership, joint venture, trust, employee benefit plan or other enterprise
of which such person is or was serving at the request of the Corporation as a
director, officer, employee or agent. The provisions of this Section 2(e) shall
not be deemed to be exclusive or to limit in any way the circumstances in which
a person may be deemed to have met the applicable standard of conduct set forth
in Sections 2(a) or 2(b) of this Article IX, as the case may be.
(f) Advance of Expenses. Expenses incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article. Such expenses (including attorneys'
fees) incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
(g) Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of
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the Corporation under paragraph (a) or (b) or advance of costs, charges and
expenses to a director or officer under paragraph (f) hereof, shall be made
promptly, and in any event within 30 days, upon the written request of the
director or officer. If a determination by the Corporation that the director or
officer is or is not entitled to indemnification pursuant to this Article is
required, and the Corporation fails to respond within sixty days to a written
request for indemnity, the Corporation shall be deemed to have approved such
request. If the Corporation denies a written request for indemnity or
advancement of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within 30 days, the right to indemnification or
advances as granted by this Article shall be enforceable by the director or
officer in any court of competent jurisdiction. Such person's costs and expenses
incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the Corporation. It shall be a defense to any such action (other
than an action brought to enforce a claim for the advance of costs, charges and
expenses under paragraph (f) hereof where the required undertaking, if any, has
been received by the Corporation) that the claimant has not, met the standard of
conduct set forth in paragraph (a) or (b), but the burden of proving such
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<PAGE>
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, its independent legal counsel, and its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in paragraph (a)
or (b), nor the fact that there has been an actual determination by the
Corporation (including its Board of Directors, its independent legal counsel,
and its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
SECTION 3. Indemnification Not Exclusive Right. The indemnification
and advancement of expenses provided by, or granted pursuant to, this Article
shall not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office. The provisions of this Article IX shall not be deemed to
preclude the indemnification of any person who is not specified in Sections
2(a) and 2(b) of this Article IX but whom the Corporation has the power or
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<PAGE>
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware, or otherwise.
SECTION 4. Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article.
SECTION 5. "Corporation" Defined for Indemnification Purposes. For
purposes of this Article, references to "the Corporation" shall include (in
addition to the Corporation and any resulting corporation) any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or
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<PAGE>
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Article with respect to the resulting or surviving corporation as he would have
with respect to such constituent corporation if its separate existence had
continued.
SECTION 6. Other Definitions for Indemnification Purposes. For
purposes of this Article, references to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to any employee benefit plan; and references
to "serving at the request of the Corporation" shall include any service as a
director, officer, employee or agent of the Corporation which imposes duties
on, or involves services by, such director, officer, employee, or agent with
respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner he reasonably believed to be in
the interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the Corporation" as referred to in this Article.
SECTION 7. Survival. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article shall continue as to a person
who has ceased to
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<PAGE>
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE X
Amendments
The Board of Directors shall have power to adopt, amend or repeal By-Laws
other than those contained in Article IX of these By-Laws. By-Laws adopted by
the Board of Directors may be repealed or changed, and new By-Laws made, by the
stockholders, and the stockholders may prescribe that any By-Law made by them
shall not be altered, amended or repealed by the Board of Directors.
-40-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>This schedule contains summary financial information extracted from the
consolidated balance sheet at March 31, 1999 (unaudited) and the consolidated
statement of income for the three months ended March 31, 1999 (unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CAPTION>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 9,570
<SECURITIES> 0
<RECEIVABLES> 105,169
<ALLOWANCES> 1,980
<INVENTORY> 23,266
<CURRENT-ASSETS> 143,965
<PP&E> 159,790
<DEPRECIATION> 113,618
<TOTAL-ASSETS> 232,610
<CURRENT-LIABILITIES> 165,185
<BONDS> 319,429
0
0
<COMMON> 627
<OTHER-SE> (254,142)
<TOTAL-LIABILITY-AND-EQUITY> 232,610
<SALES> 221,906
<TOTAL-REVENUES> 222,205
<CGS> 138,421
<TOTAL-COSTS> 159,698
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 225
<INTEREST-EXPENSE> 7,391
<INCOME-PRETAX> 54,891
<INCOME-TAX> 21,000
<INCOME-CONTINUING> 33,891
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,891
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.58
</TABLE>
